If you’re struggling to manage your debt and don’t have a plan to pay it off, start here. These easy ways to cut down your debt include financial strategies recommended by experts as well as simple tips to improve your money habits.
Before you start repaying debt, first make a list of each debt you owe along with its type, remaining balance and interest rate. Identify whether this debt is credit card debt, student loan debt, mortgage debt or something else.
Then start making a plan with these 14 easy ways to pay off debt:
— Create a budget.
— Pay off the most expensive debt first.
— Pay off the smallest debt first.
— Pay more than the minimum balance.
— Take advantage of balance transfers.
— Stop your credit card spending.
— Use a debt repayment app.
— Delete credit card information from online stores.
— Sell unwanted gifts and household items.
— Change your habits.
— Increase your income with a side hustle.
— Consider debt consolidation.
— Get help from a credit counseling agency.
— Avoid returning to bad habits when you reach your goal.
1. Create a Budget
To repay your debt, start by tracking your income and expenses with a monthly budget.
A budget is an easy way to get organized at the start of debt repayment. Yours can be as simple as a spreadsheet or more complex, utilizing budgeting apps like Mint to closely track every expense and debt payment.
2. Pay Off the Most Expensive Debt First
Tackling the most expensive debt first using a strategy called the debt avalanche involves repaying debts with the highest interest rates first. During this repayment strategy, you should continue to pay the minimum on your other, less expensive debts, but focus any extra cash you have available on the most expensive debts.
This strategy may save you money in the long run by getting rid of bad debts, like credit card debt, more quickly.
“Most Americans are making suboptimal decisions when it comes to managing debt,” says Joseph Goetz, founder and chief information officer of Elwood & Goetz. “There are millions of American households sending extra money to their mortgages while at the same time they have an auto loan or a credit card at a much higher interest rate, and that’s costing them thousands of dollars over time.”
[SEE: Things to Do When You’re Deep in Debt.]
3. Pay Off the Smallest Debt First
This strategy, known as the debt snowball, requires borrowers to tackle the debts smallest in size first. Starting by repaying a small debt in full is easier than trying to take on a large student loan or mortgage debt, and repaying a small debt may provide you with the motivation you need to continue forward on your debt repayment journey.
Determining which debt to tackle first can depend on an individual’s financial stability and other factors.
4. Pay More Than the Minimum Balance
To make a real impact on your debts, you’ll likely need to pay more than the minimum balance on your credit card statements each month. Managing debt by using credit cards, which typically come with high interest rates, can be extremely costly.
You may also consider putting extra money toward the principal on a home mortgage, so long as those extra payments wouldn’t be better utilized on other debts.
5. Take Advantage of Balance Transfers
A balance transfer allows you to move your debt from one account to another, possibly taking advantage of low introductory rates. Applying for a new credit card and going through this process may not be possible for some individuals, depending on the card used and other options available.
This strategy is best if you know you’ll be able to pay off the balance within a short time frame.
6. Stop Your Credit Card Spending
If overspending is causing you to add to your debts unnecessarily, try removing your credit cards from your wallet completely. This strategy is simple, but it can take away the temptation to overspend and allow you to focus on getting your finances under control.
7. Use a Debt Replacement App
Debt repayment apps like Tally and Undebt.it help users track their debts and provide a visual, easy-to-understand tool for paying off debts. Alongside these apps, take advantage of free credit reports and services that allow you to closely monitor your credit score. Major credit bureaus Equifax, Experian and TransUnion must make these reports available to consumers for free annually.
8. Delete Credit Card Information from Online Stores
If it’s not enough to remove your credit card from your wallet, take this self-control measure a step further by deleting credit card information stored online on sites like Amazon. Online shopping can be a real barrier to becoming debt-free, so take steps to kick this habit.
9. Sell Unwanted Gifts and Household Items
Come up with some extra cash by selling unwanted items from your home. This is easier than ever with shops like Poshmark and the RealReal specializing in consignment clothing and sites like Facebook and Craigslist, where just about anything can be bought and sold. Put all the money from your sales toward paying down your debts.
10. Change Your Habits
Overspending and accumulating large debts is often a behavioral issue, according to Colin Moynahan, financial planner and founder of Twenty Fifty Capital. Be honest with yourself about your daily habits and spending, then make the necessary lifestyle changes to start repaying your debts.
“You have your necessary expenses — food, shelter, health — and then you’ve got the discretionary stuff,” Moynahan says. “When you talk about avoiding debt, it comes back to priorities. Is this a necessary expense or a discretionary expense? If you truly went through your statement line by line, I think most people would be surprised by how much of that is discretionary.”
[Read: Inside the Psychology of Overspending and How to Stop.]
11. Increase Your Income With a Side Hustle
The larger your shovel, the faster you can dig. Increase your income stream by taking on a second job or freelance project, then use those extra funds to more quickly repay your debts. Jobs like pet sitting, tutoring or working as a virtual assistant are easy to start and can provide enough cash to make a dent in your debts.
12. Consider Debt Consolidation
Debt consolidation allows borrowers to repay their debt to a single loan with one monthly payment. Consolidation can also lead to a lower interest rate, and it can be an opportunity to negotiate a better repayment plan on certain debts.
[Read: Best Debt Consolidation Loans.]
13. Get Help From a Credit Counseling Agency
Debt repayment can be overwhelming. Contact the National Foundation for Credit Counseling to receive free help with debt management.
“This is a network that’s not for profit, and it’s a place for people to get help,” Goetz says. “A lot of people end up going to for-profit entities, as there’s a huge amount of fraud taking place for people who are vulnerable and have large amounts of debt.”
14. Avoid Returning to Bad Habits When You Reach Your Goal
Once you reach your goal, you’ll need to keep up your good money habits to stay debt-free. Take the time to understand how you came to be in debt to avoid finding yourself there again.
“The only way to truly pay off debt in the long term is to fix the underlying reason — usually spending, or else the debt’s going to come right back,” Moynahan says.
More from U.S. News
10 Debt Relief and Payoff Options
9 Reasons You’re Still in Debt
What Happens to Debt When You Die?
14 Easy Ways to Pay Off Debt originally appeared on usnews.com
Update 02/23/22: This story was published at an earlier date and has been updated with new information.
